Personal Finance Chapter 5

Insurance up to _________ on each account is provided for depositors by the FDIC.

$250,000

Checkbook Register

A booklet used to record checking account transactions.

Certified Check

A personal check that the bank guarantees or certifies to be good.

Stop-Payment Order

A request that the bank not honor a specific check.

Share Account

A savings account representing ownership interest.

Cashiers Check

Also called a bank draft, is a check written by a bank on its own funds.

A debit card is the same as a credit card. True or False

False

When a minimum balance is not maintained in a checking account, the bank will usually waive a service charge. True or False

False

Your only option when cashing a check is to endorse it with a blank endorsement.​ True or False

False

Safe Deposit Box

Financial institutions offer them to customers to store valuable items or documents.

What are some types of checking accounts?

Joint, special, standard, money market, and share drafts.

Bank Reconciliation

The process of matching your checkbook register with the bank statement.

Demand Deposit

What a checking account is known as.

Checks over _________ old may not be honored by a bank.

6 months

Debit Card

A bank card that deducts money from a checking account almost immediately to pay for purchases.

Canceled Check

A check that has cleared your account.

Overdraft

A check written for more money than your account contains.

What are some advantages of having a checking account?

A checking account is a good way to pay your bills, it is safer than carrying cash, it is a built-in record-keeping system, it provides proof of purchases, and it gives you access to many other banking services.

Special Account

Banks offer this to customers who have a small amount of activity in their accounts each month.

Why is it important to reconcile your bank accounts?

Can identify errors you may have made, checks not accounted for, and other important information such as fees and other automatic payments from your account. Doing this helps you avoid overdrafts and fees.

A __________ check is one that has been cleared, or processed, by your bank and deducted from your account.​

Canceled

A check that has cleared your bank account is said to be a(n):

Canceled Check

What is a check written by a bank on its own funds called?

Cashiers Check

A _________ is a personal check that the bank guarantees to be good.

Certified Check

A __________ account is a demand deposit that provides a safe, convenient way to pay bills.​

Checking

Certified checks and cashier's checks are not guaranteed by the bank to be paid.​ True or False

False

Financial institutions usually do not charge a fee for checking account services. True or False

False

Joint Account

Is opened by two or more people.

How can you avoid service fees charged by banks?

Know the bank's policies and choose the type of checking account carefully.

What does Interest=

Principal x Rate x Time

A _________ is a safe place to keep stocks and bonds, deeds, and other important documents.

Safe Deposit Box

A(n) _________ account charges customers fees based on the number of checks written each month; a minimum balance is usually not required.

Special

Check My Work A _________ endorsement results when the payee signs over a check to a third person.

Special

A __________ is a request that the bank not honor a specific check.​

Stop-Payment Order

When payment on a check is prevented by the bank before it can be made to the payee, it is a(n)

Stop-Payment Order

__________ checks provide a readily acceptable and safe form of payment for people who are traveling.​

Traveler's

A money market account is an interest-bearing checking account that pays a higher rate of interest. True or False

True

Banks offer individual accounts, joint accounts, special accounts, standard accounts, and money market accounts. Credit unions offer share and share draft accounts.​ True or False

True

Electronic funds transfer (EFT) often involves the use of ATM machines. True or False

True

Financial institutions offer safe deposit boxes to customers to store valuable items or documents. True or False

True

If you float a check, you are risking the possibility of an overdraft on your account because today's electronic systems process checks so quickly.​ True or False

True

It is important to reconcile your checkbook immediately when you receive the bank statement. True or False

True

Most financial institutions offer online and telephone banking services. True or False

True

To open an account, either checking or savings, you first must fill out and sign a signature form. True or False

True

When a check you have issued has been lost or stolen, you should request a stop payment order. True or False

True

When filling out a deposit form to the left of the amount you should right ABA American Bank association.

True

With online banking, you can make deposits and withdrawals. True or False

True

With overdraft protection, your checks will be covered even if you have insufficient funds in your checking account.​ True or False

True

ATM Fee

Typically charged by an ATM that does not belong your own bank.

Electronic Funds Transfer (EFT)

Uses a computer-based system that enables you to move money from one account to another without writing a check or exchanging cash.

Standard Account

Usually has a small monthly service fee and no per-check fee.

Notary Public

Verifies a person's identity, witnesses the person's signature on a legal document, and then "notarizes" the signature as valid.

NSF Fee

When you spend more than you have in your account and you don't have overdraft protection.

Overdraft Protection

Your checks will be covered even if you have insufficient funds in your checking account.